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Following on from our article regarding mutual wills https://qbmlawyers.demo2.website/estate-lawyers-gold-coast/estate-lawyers-gold-coast-mutual-wills/, the Queensland Supreme Court has recently considered whether Mutual Wills had come into existence without any express statement in the Will that they were mutual.  Relevantly, this was a matter in which a husband and wife had made “mirror wills” (ie giving their estate to each other, and then giving their estates to the same beneficiaries if they both passed).  A few years after the wills were made, the husband made another will under which, if his wife passed, he gave more of his estate to his relatives than to the relatives of the wife.  The husband died a few years after the wife passed, at which time the relatives of the wife (or at least one of them) was unhappy at the change of the will which resulted in the relatives of the wife receiving less of the estate.  He brought an action claiming that the wills were mutual wills and that the husband could not change his will without the consent of the wife, and that once she lost capacity the wills could not be changed at all.  The action failed.  His Honour Justice Kelly in the Queensland Supreme Court made the following observations about previous decisions concerning Mutual Wills: The starting point is that a Will is revokable and may be revoked by making a later will. At the heart of the doctrine of Mutual Wills is the existence of a formal, legally binding agreement, often between husband and wife, not to revoke the effect of the two wills which are made together and essentially on the same terms; What is needed to establish Mutual Wills is proof that the parties made an agreement to execute their wills in reciprocal terms and – expressly or by implication – they contracted not to revoke (change) those wills; Mutual Wills arise when two people agree to make wills in particular terms and agree that those Wills are irrevocable and that they will remain unaltered; Substantially similar or even identical wills are not Mutual Wills unless there is an agreement that they will not be revoked; Making Wills simultaneously and with similar terms is not enough to establish an agreement not to revoke them; Even though a will (and even a Mutual Will) is revocable, if there is a Mutual Will, then an action arises to make the survivor behave in accordance with the Mutual Will; A common reality is that a married couple might make informal agreements about their wills which are not intended to be legally binding.  The couple might trust each other in point of honour to deal fairly and reasonably in light of the circumstances as they might arise during the survivor’s lifetime; Perhaps most husbands and wives make wills by agreement but they do not bind themselves not to revoke their wills and do not intend to undertake or impose any kind of binding nomination. On the facts that were under consideration, there was not sufficient evidence of an agreement to the effect of a Mutual Will.  As we have discussed in our article on Mutual Wills, a lawyer should be extremely cautious about taking instructions to act on behalf of a couple in making Mutual Wills.  The will – in essence – could result in the surviving spouse being unable to effectively make a new will for decades, in circumstances which are changing.  As an example, the Mutual Will might give assets to beneficiaries who later turn on the survivor and make their life a misery but the survivor will have no ability to remove them from their entitlement to benefit.  There could be other circumstances that change such as a remarriage, a beneficiary becoming bankrupt (as a result of which the trustee in bankruptcy could receive the inheritance, a charity being dissolved or any other number of situations which would ordinarily result in an updating to wills.  If it is good practice to review and update wills every three to five years, then it cannot be good practice to have a will which could bind someone for 30 years or longer. For enquiries regarding mirror or mutual wills, please contact Peter Muller at peterm@qbmlaw.com.au or Jessica Murray jessicam@qbmlaw.com.au

A recent Supreme Court decision considered the costs of a dispute between adjoining owners as to the conditions under which the property A owner could enter into the property B owner’s land of the other to carry out work to property A. The entitlement to do so is triggered by section 180 of the Queensland Property Law Act, and is called the “statutory right of user”. It might be for a permanent easement going through property B to benefit property A (say for access or services), or for a temporary right to enter property B, in this case to install scaffolding along the common boundary. Requests of this nature are concerning for the owner of property B, there are liability issues to consider, and also any permanent impairment on the value of property B or the ability to use it. Section 180 has preconditions to the making of orders which are quite rigorous, and a wide discretion for the kinds of orders that can be made, including for compensation. The decision can be found here and provides a good summary of the effect of the section and costs considerations https://www.sclqld.org.au/caselaw/QSC/2022/160 The section itself is here: http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s180.html

In most discretionary or family trusts, there are three main roles.  The first is of the trustee, who holds the property and carries on the business for the benefit of the trust.  The second is the identity of the primary beneficiaries.  Usually, the beneficiaries will be in some way related or associated with the primary beneficiaries, and it is usually to the primary beneficiaries that the income of the trust will be allocated if it is not distributed by the end of the financial year, and it is usually to the primary beneficiaries that the capital of the trust will be returned when the trust is wound up.  The third role is that of “Appointor”, sometimes called “Principal” or “Nominator”.  The power of the Appointor is one which allows them to dismiss the trustee and appoint a new trustee in their place, or to fill the role of trustee if it is otherwise vacated (as an example, by the death of the Trustee), without having to make an application to court. As a result, the position of Appointor is a very important one, as in an extreme case the Appointor can dismiss a Trustee who they are for some reason unhappy with and appoint themselves or a more compliant person or company to be trustee in their place.  It is therefore critical that if the Appointor ceases to have that role, the trust deed provides for a suitable replacement process. Many trust deeds provide for the power of appointment to be vacated in the event that the Appointor is bankrupted or dies.  The power of appointment is not a property right and will not normally go to a trustee in bankruptcy if the Appointor is bankrupted.  Despite that, some commonly used trust deeds provide that on a person becoming bankrupt, the power of appointment vests in their “legal personal representative”.  Unless otherwise defined in the trust deed itself, the expression “legal personal representative” is one that is only relevant to superannuation law (and in that context means the executor of the persons last Will).  As discretionary trusts are not governed by superannuation legislation, it is arguable that the “legal personal representative” of the Appointor is actually their trustee in bankruptcy, literally the last person that the parties to the trust would want to hold the power of appointment in respect of the trust.  It is accordingly important to check the power of appointment in trust deeds to ensure that not only does it reflect what you want, but also the succession (replacement) provisions reflect a sensible outcome.  This should be done frequently, and also as part of estate planning processes. For enquiries regarding trusts and estate planning, please contact Peter Muller at peterm@qbmlaw.com.au or Jessica Murray jessicam@qbmlaw.com.au

Many will be familiar with binding death benefit nominations for their superannuation funds. These nominations direct the trustee of the fund to pay the benefit upon a member’s death in a particular way (generally to “dependants” in particular proportions, or to the legal personal representative (executor of the will or trustee of the estate) of the member. In the absence of the binding death nominations, it is for the trustee to decide which dependants are to receive the benefit, and in what order. Under the superannuation legislation, there are particular requirements for valid nominations, eg, they require two independent witnesses, and unless authorised by the superannuation trust deed to be non-lapsing, they will lapse after 3 years. The importance of this is that if a nomination is not done correctly, it does not bind the trustee who will then usually consider competing claims of dependents, whether or not that represents the wishes of the member. So first it is critical when estate planning to get the the nominations right, it is also critical to ensure that the they conform with the trust deed for the fund (you’d be surprised at how often they do not, and often even the form attached to the trust deed does not conform to the wording of the trust deed). With superannuation often forming a large part of the wealth distributed on a person’s death, the nominations are often challenged. As an example, let’s say that Joe dies. He has a child to his first marriage, now 25 years old, and has left a $1M superannuation benefit with a binding nomination to that child. His second wife and the child don’t get along. Under his will she gets his estate which is his home worth $1M, and $100K in the bank. If the nomination is valid, that is how the estate will be distributed. If it isn’t, then his new wife can press for part or all of the superannuation death benefit. If it was paid into his estate, then she would receive all of it, and the child would miss out entirely. A number of challenges to binding nominations are whether they comply with particular provisions in the superannuation regulations, reg 6.17A which sets out formal requirements. The High Court has recently confirmed that it does not apply to self managed superannuation funds. This means that for industry funds, it is critical that the nominations comply with the trust deed and regulation 6.17A. For a SMSF, the nomination does not have to comply with reg 6.17A save to the extent that the trust deed requires, but it has to comply with the fund deed. For advice in relation to wills and estates, contact Jessica Murray (jessicam@qbmlaw.com.au) or Peter Muller (peterm@qbmlaw.com.au).